Spain has the earliest institutionalized catastrophe insurance bodies in Europe with its public business institution, Consorcio de Compensación de Seguros (CCS). The establishment of CCS dates back to 1941, then named the Compensation Consortium for Riot Risks, its aim was to handle compensation related to the Spanish Civil War. During 1954 this body was renamed to its current name, CCS to provide compensation regarding extraordinary risks such as natural catastrophes. This makes Spain’s natural catastrophe approach world-leading.
Spain’s scheme requires insurance companies to collect and remit special climate change and disaster events charges from their policyholders. These mandatory charges, levied on specific Class of Businesses (CoBs) create a robust pool fund of which CCS Spain insurance is available to rapidly compensate losses after catastrophic events like extraordinary floods (e.g. DANA in 2024).
Part of the natural catastrophe series, this blog summarizes the charges payable by insurance companies in relation to Spanish CATNAT risks. This series also covers:
- The Impact of Climate-Related Events on IPT
- ECB & EIOPA Proposal
- CATNAT Regime in France
- Treatment of Natural Catastrophe Insurance in Iceland
Scope of CATNAT risks covered by the CCS
There are various risks in the range of property (e.g. motor, railway rolling stocks etc.) and personal (e.g. life and accident policies) covers in relation to which CCS collects surcharges, however, this blog only focuses on the natural forces risks and the corresponding surcharges. Other risks can be categorized as human risks, such as terrorism.
Natural risks covered by Spain’s CCS include:
- earthquakes
- tidal waves or tsunamis
- floods
- volcanic eruptions
- storms, storm surge and wind storms (tornados and wind gusts above 120 km/h)
- extraordinary hailstorms
- lightning
- snow pressure and avalanche
- frost, extraordinary subsidence and landslides
- collapsing sinkholes
- meteorites
Risks subject to the CATNAT surcharge regime
In the context of natural catastrophe insurance, insurers are mandated to collect the Consorcio de Compensación de Seguros surcharge, commonly referred to as the extraordinary risks (EoR) surcharge, from policyholders and remit these amounts directly to the Consorcio de Compensación de Seguros (CCS).
This obligation extends not only to domestic insurers but also to foreign insurance companies domiciled within the European Union (EU) or European Economic Area (EEA) that are authorized to underwrite risks covering natural catastrophe (CATNAT) exposures.
EoR surcharges related to CATNAT (catastrophe/natural hazard) risks are levied on insurance policies covering specific classes of risks. The determination of these classes follows the mapping set forth in Annex I of Directive 2009/138/EC (Solvency II):
- Class 1: Accident
- Class 4: Railway Rolling Stocks
- Class 8: Fire and Natural Forces
- Class 9: Other Damage to Property
How to calculate Spain MOD10 CATNAT surcharge (Step-by-Step Example)
Insurance companies that underwrite policies covering the above-mentioned classes of business are required to apply the Modelo 10 or MOD10 surcharge using the following Spain CATNAT calculation.
The calculation of MOD10 involves a particularly complex methodology, with several factors impacting the determination of the levy:
Step 1: Identify risk category / COB
Distinct rates apply according to the nature of the insured risk (e.g. property, stock, accident).
Step 2: Determine insured value
Separate per mille rates are assigned via property category, including residential, office, and commercial property risks.
The total amount insured under the policy serves as the fundamental basis for the surcharge calculation.
Step 3: Apply indemnity coefficient
When the insured value does not represent the full value of the property, a coverage coefficient is utilized to adjust the premium.
Step 4: Apply rate
Preferential rates may be available for policies with a sum insured exceeding specific thresholds (such as EUR 600 million).
A minimum premium, determined as a percentage (Prima Minima) of either the sum insured or the premium collected, may apply, with the higher value from two formulas used for calculation.
Step 5: Adjust surcharge for duration of policy
While the calculation is standard for policies with a one-year term, the MOD10 surcharge must be proportionally adjusted for policies of shorter or longer duration.
This sophisticated calculation structure ensures the surcharge remains fair, risk-appropriate, and complies with Spanish regulatory standards for extraordinary risk coverage.
The following charts provide help with the calculation of MOD10 surcharges:
A) Rates per property categories and the amount of sum insured (points 2, 3 and 5)
| Risk category | Rates below EUR 600M insured value (per thousand sum insured) |
Rates above EUR 600M insured value (per thousand sum insured) |
|---|---|---|
| Dwelling | 0.07 | 0.05 |
| Offices | 0.12 | 0.08 |
| Other risks* | 0.18 | 0.15 |
*Includes railway rolling stocks
B) Rates per Indemnity Limit and Prima Minima (points 4 and 6)
| Percentage of the total insured risks covered by the indemnity limit | Coefficient (Indemnity Increase) | Minimum Premium (Sum Insured Decrease) |
|---|---|---|
| More than 75% | 1 | 100% |
| 50% to 75% | 1.3 | 86% |
| 27% to 50% | 1.7 | 65% |
| 10% to 27% | 2.4 | 36% |
| Up to 10% | 3.5 | 20% |
C) Accident policies trigger the following rates (Point 1)
| Risk category | Taxable basis | Rate |
|---|---|---|
| Accident | Sum insured | 0.003 per thousand |
| Accident > travel > linked to credit cards | Sum insured | 0.00025 per thousand |
| Accident > passenger > Occupant insurance | Per insured | 3 EUR per insured |
Example calculation:
Sum Insured (SI): EUR 200,000,000
Limit of Indemnity (LoI): 140,000,000
Risk: Factory
=140,000,000/200,000,000=0.7 (70%). Therefore, Coefficient is 1.3, Minimum Premium is 86%.
| Formula 1 | Formula 2 |
|---|---|
| LoI * Coefficient
EUR 140,000,000 * 1.3 = 182,000,000 |
SI * Minimum Premium
EUR 200,000,000 * 86% = 172,000,000 |
MAX of Formulas = Formula1 = 182,000,000 is the sum insured for MOD10 calculation.
Hence, MOD10 calculates as EUR 182,000,000 * (0.18/100)=EUR 32,760.
If MOD10 is paid on time a 5% reduction is available. So ultimately EUR 32.760*95%= EUR 32,122 is the payable MOD10 at the inception date for a policy that has a duration of 1 year.
Spain CATNAT: How Sovos Can Help
Sovos can assist in identifying whether a particular policy is within the scope of the CATNAT Spain regime and with the declaration and settlement of the taxes due using the MOD10 calculation.
Need help with CATNAT?
Contact our experts today for more information about CATNAT, Spain’s IPT requirements and more.
Spain CATNAT FAQs
Who must pay the Consorcio surcharge in Spain?
The Consorcio surcharge (CCS) must be paid by policyholders who hold specific types of insurance policies covering risks located in Spain.
What is MOD10?
MOD10 is a tax calculation method for CATNAT in Spain. This calculation is complex and depends on factors such as type of risk, policy duration, indemnity limits, and taxable base.
Are foreign insurers required to collect CCS surcharge?
Foreign insurers located out of Spain are required to collect Consorcio de Compensación de Seguros (CCS) surcharges if they cover risks located in Spain.
What risks are covered under Spain CATNAT?
Spain CATNAT covers natural disasters such as floods, earthquakes, and tsunamis, as well as events like terrorism.
Is the CCS surcharge part of IPT?
No, the CCS surcharge (Consorcio de Compensación de Seguros) in Spain is not part of the Insurance Premium Tax (IPT) itself, but it is a separate mandatory surcharge that is added to the insurance premium.